CEBU, Philippines - The Bureau of Internal Revenue has ruled that a one percent withholding tax will be imposed on income payments of real estate investment trusts and agricultural suppliers.
In a new ruling, the tax agency said that apart from the tax incentives that REIT firms receive, they would also be subjected to a lower creditable withholding tax rate of one percent for the income they generate.
Jose Hector Baronda, assistant legal chief of BIR in Cebu, said that under the law, there are many requirements for the transfer of real estate from property owners to the REIT. REIT Act was passed into law in 2009.
Value added tax is imposed on the transfer, requiring property firms that want to sell shares in real estate trusts to spend an additional cost of 12 percent.
REITs are stock corporations that own and operate income-generating real estate assets.
On the other hand, suppliers of agricultural products will also have to pay a one percent withholding tax in excess of their collective amount of P300,000 within the same taxable year.
These are the suppliers paid by hotels, resorts, caterers, canneries, food processors, supermarkets, livestock, poultry, fish and marine product dealers, factories and other establishments.
These agricultural products may include corn, coconut, copra, palay, cassava, coffee, marine goods, vegetable and fruit.
Baronda said these suppliers had not been tapped considering their inclusion in the marginal sector but the BIR observed that many businesses got them for supplies. And that could mean an increase in their income, he said.
The revenue official explained this new ruling came as part of the bureau’s effort to identify new revenue sources to offset the tax reducing measures which may trigger government budget deficit.
“We have a committee in the national office tasked to identify untapped revenue sources,” he said. (FREEMAN)